ICTSI’s Razon gets subpoena over estafa complaint

MANILA, Philippines – International Container Terminal Services Incorporated (ICTSI) head honcho and the Philippines’ 8th wealthiest man, Enrique Razon Jr, is facing a city prosecutor’s scrutiny of how he acquired about 28 million shares in the listed port operator.

“You are hereby commanded and required to appear at the Office of the City Prosecutor of Manila…on October 4, 2016 at the hour of 10 am then and there to file your evidence in the above-entitled criminal investigation,” Eduardo Meneses Jr, senior assistant city prosecutor, said in a subpoena letter dated September 19, 2016.

This stems from an estafa complaint filed before the City Prosecutor’s Office of Manila by Makiling Farms Incorporated – a minority stakeholder of one of Razon’s then family-owned firms, E. Razon Incorporated (ERI).

It is claiming a 5% equity in ICTSI (around 7.7 million shares), which it alleged was illegally transferred to the port magnate’s late father Enrique Razon Sr in 2004.

Based on the current market capitalization of ICTSI, Makiling’s claims would be valued at around P250 million. ICTSI shares are priced at P78.60 apiece. It’s the key business of Razon Jr, who, based on the August 2016 Forbes list, is worth $3.5 billion, making him the 8th richest Filipino.

A copy of a complaint-affidavit dated July 7, 2016 showed that Makiling, which is represented by its chairman and president Francis Roa de Borja, is claiming that ERI is still under sequestration proceedings at the Sandiganbayan.

This allegation questions who is the real owner of the about 28 million shares of ICTSI.

A look at the incorporation papers of ICTSI showed that ERI owns 28.05 million shares of the original 60 million shares of ICTSI.

Makiling: No lifting of sequestration

Makiling said in its complaint that although ERI has long been dissolved, its corporate assets were never liquidated by Razon, whose family was the controlling stockholder.

In 1996, ERI was sequestered by the Presidential Commission on Good Government (PCGG) due to its connections with Alfredo “Bejo” Romualdez, the late dictator Ferdinand Marcos’ brother-in-law.

In 1978, Razon Jr’s father was reportedly pressured by Marcos to give up his ownership of ERI to Romualdez without compensation. 

This became the basis of ERI’s sequestration under the leadership of late President Corazon Aquino.

But the younger Razon said in a counter-affidavit submitted on August 8 that his late father, in behalf of ERI, paid PCGG P9 million in 1990 to lift the sequestration and dismiss the case by the Sandiganbayan.

“ERI is still under sequestration proceedings at Sandiganbayan and therefore a large chunk of ICTSI shares from ERI, which then was transferred to Razon-related parties, is affected,” said a statement from Makiling.

ERI, which bagged the contract to manage the Port of Manila, subscribed to the 47% of the original 60 million shares of ICTSI.

Established in 1987, ICTSI then took over the operations of the Port of Manila.

“This is not just about Makiling’s financial interest. It’s about Razon’s fiduciary duty as director and controlling stockholder of ERI. This extends to all corporate assets of ERI, which he was deemed to be holding in trust for the benefit of all stockholders,” the statement from Makiling added. 

Razon: Complaint ‘baseless, false’

For Razon, Makiling is “obviously trying to resurrect via-the-backdoor its monetary claims which are patently baseless.”

“It is clearly nothing more than a harassment suit intended to create undue leverage against me,” Razon, who also owns the operator of Solaire Resort and Casino, added in his counter-affidavit.

Makiling then replied by alleging Razon has failed to prove that his father paid P9 million to PCGG for it to lift the sequestration.

Makiling said that should Razon show proof of payment before the prosecutor’s office, it would withdraw its claim, covering its ownership of 7.7 million shares in ICTSI.

Makiling obtained a certification from the Sandiganbayan that the sequestration case concerning ERI is still pending.

Missing 1990 proof of payment

Razon said in the counter-affidavit that he “could not produce the proof of payment of the P9 million” because the transaction happened more than two decades ago.

“The sheer passage of time made it impossible for me to speak with person who may have had personal knowledge of the circumstances surrounding the deed of assignment, in order to testify on my behalf,” he said in his counter-affidavit.

“Who keeps an official receipt for 26 years? The fact is PCGG is satisfied that Mr. Razon Sr. had complied with his obligation under the Agreement between the Republic of the Philippines through the PCGG dated April 10, 1990, expressly referred to in the PCGG Order dated May 22, 1990,” Razon Jr added.

For Razon, there is no need to produce a copy of agreement on the lifting of sequestration.

“It is the complainant who must prove that my father did not pay the PCGG P9 million. It is not me who has to prove such payment,” Razon said in his counter-affidavit.

Asked why it took Makiling 26 years to file a complaint, its representative who requested anonymity said that the father of Francis Roa de Borja, who originally acquired ERI shares, tried to “reach a settlement for years because he was friends with the late grandfather of Ricky Razon. But the settlement did not happen.”

The source privy to the matter said Razon early this year tried to pay Makiling P10 million to settle its claim over its proportionate ownership covering the 7.7 million ICTSI shares. But the source said Makiling rejected the offer.

“It was then when the kids decided to file a complaint against Ricky (Enrique Razon Jr). It is time to speak up,” the source said.

From one terminal port in Manila in 1988, ICTSI has grown to one of the top operators in the world. 

ICTSI currently operates in 29 port locations in the Asia Pacific, Americas, as well as Europe, Middle East, and Africa.

The listed port operator registered a net income of $87.3 million in the first half of 2016. – Rappler.com